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International Marketing New! Consumer Psychology & Marketing
International Marketing New! Consumer Psychology & Marketing
International Marketing New! Consumer Psychology & Marketing
MARKETING
INTERNATIONAL MARKETING
Trade balances and exchange rates. When exchange rates are allowed to
fluctuate, the currency of a country that tends to run a trade deficit will tend
to decline over time, since there will be less demand for that currency. This
reduced exchange rate will then tend to make exports more attractive in
other countries, and imports less attractive at home.
Measuring country wealth. There are two ways to measure the wealth of a
country. The nominal per capita gross domestic product (GDP) refers to the
value of goods and services produced per person in a country if this value in
local currency were to be exchanged into dollars. Suppose, for example, that
the per capita GDP of Japan is 3,500,000 yen and the dollar exchanges for
100 yen, so that the per capita GDP is (3,500,000/100)=$35,000. However,
that $35,000 will not buy as much in Japan—food and housing are much
more expensive there. Therefore, we introduce the idea of purchase parity
adjusted per capita GDP, which reflects what this money can buy in the
country. This is typically based on the relative costs of a weighted “basket”
of goods in a country (e.g., 35% of the cost of housing, 40% the cost of food,
10% the cost of clothing, and 15% cost of other items). If it turns out that
this measure of cost of living is 30% higher in Japan, the purchase parity
adjusted GPD in Japan would then be ($35,000/(130%) = $26,923. (The
Gross Domestic Product (GPD) and Gross National Product (GNP) are
almost identical figures. The GNP, for example, includes income made by
citizens working abroad, and does not include the income of foreigners
working in the country. Traditionally, the GNP was more prevalent; today
the GPD is more commonly used—in practice, the two measures fall within
a few percent of each other.)
In general, the nominal per capita GPD is more useful for determining local
consumers’ ability to buy imported goods, the cost of which are determined
in large measure by the costs in the home market, while the purchase parity
adjusted measure is more useful when products are produced, at local costs,
in the country of purchase. For example, the ability of Argentinians to
purchase micro computer chips, which are produced mostly in the U.S. and
Japan, is better predicted by nominal income, while the ability to purchase
toothpaste made by a U.S. firm in a factory in Argentina is better predicted
by purchase parity adjusted income.
The reality of legal systems. Some legal systems, such as that of the U.S.,
are relatively “transparent”—that is, the law tends to be what its plain
meaning would suggest. In some countries, however, there are laws on the
books which are not enforced (e.g., although Japan has antitrust laws similar
to those of the U.S., collusion is openly tolerated). Further, the amount of
discretion left to government officials tends to vary. In Japan, through the
doctrine of administrative guidance, great latitude is left to government
officials, who effectively make up the laws.
Legal systems of the World. There are four main approaches to law across
the World, with some differences within each:
Anti-trust. U.S. antitrust laws are generally enforced in U.S. courts even if
the alleged transgression occurred outside U.S. jurisdiction. For example, if
two Japanese firms collude to limit the World supply of VCRs, they may be
sued by the U.S. government (or injured third parties) in U.S. courts, and
may have their U.S. assets seized.
Culture
Culture is part of the external influences that impact the consumer. That is,
culture represents influences that are imposed on the consumer by other
individuals.
The definition of culture offered one text is “That complex whole which
includes knowledge, belief, art, morals, custom, and any other capabilities
and habits acquired by man person as a member of society.” From this
definition, we make the following observations:
Although Hofstede’s original work did not address this, a fifth dimension of
long term vs. short term orientation has been proposed. In the U.S.,
managers like to see quick results, while Japanese managers are known for
take a long term view, often accepting long periods before profitability is
obtained.
High vs. low context cultures: In some cultures, “what you see is what you
get”—the speaker is expected to make his or her points clear and limit
ambiguity. This is the case in the U.S.—if you have something on your
mind, you are expected to say it directly, subject to some reasonable
standards of diplomacy. In Japan, in contrast, facial expressions and what is
not said may be an important clue to understanding a speaker’s meaning.
Thus, it may be very difficult for Japanese speakers to understand another’s
written communication. The nature of languages may exacerbate this
phenomenon—while the German language is very precise, Chinese lacks
many grammatical features, and the meaning of words may be somewhat
less precise. English ranks somewhere in the middle of this continuum.
Primary vs. secondary research. There are two kinds of market research:
Primary research refers to the research that a firm conducts for its own needs
(e.g., focus groups, surveys, interviews, or observation) while secondary
research involves finding information compiled by someone else. In
general, secondary research is less expensive and is faster to conduct, but it
may not answer the specific questions the firm seeks to have answered (e.g.,
how do consumers perceive our product?), and its reliability may be in
question.
Hard vs. soft data. “Hard” data refers to relatively quantifiable measures
such as a country’s GDP, number of telephones per thousand residents, and
birth rates (although even these supposedly “objective” factors may be
subject to some controversy due to differing definitions and measurement
approaches across countries). In contrast, “soft” data refers to more
subjective issues such as country history or culture. It should be noted that
while the “hard” data is often more convenient and seemingly objective, the
“soft” data is frequently as important, if not more so, in understanding a
market.
Intermarket segmentation entails several benefits. The fact that products and
promotional campaigns may be used across markets introduces economies
of scale, and learning that has been acquired in one market may be used in
another—e.g., a firm that has been serving a segment of premium quality
cellular phone buyers in one country can put its experience to use in another
country that features that same segment. (Even though segments may be
similar across the cultures, it should be noted that it is still necessary to learn
about the local market. For example, although a segment common across
two countries may seek the same benefits, the cultures of each country may
cause people to respond differently to the "hard sell" advertising that has
been successful in one).
The international product life cycle suggests that product adoption and
spread in some markets may lag significantly behind those of others. Often,
then, a segment that has existed for some time in an "early adopter" country
such as the U.S. or Japan will emerge after several years (or even decades)
in a "late adopter" country such as Britain or most developing countries. (We
will discuss this issue in more detail when we cover the product mix in the
second half of the term).
Entry Strategies
On the topic of services, cultural issues may be even more prominent than
they are for tangible goods. There are large variations in willingness to pay
for quality, and often very large differences in expectations. In some
countries, it may be more difficult to entice employees to embrace a firm’s
customer service philosophy. Labor regulations in some countries make it
difficult to terminate employees whose treatment of customers is
substandard. Speed of service is typically important in the U.S. and western
countries but personal interaction may seem more important in other
countries.
Product Need Satisfaction. We often take for granted the “obvious” need
that products seem to fill in our own culture; however, functions served may
be very different in others—for example, while cars have a large
transportation role in the U.S., they are impractical to drive in Japan, and
thus cars there serve more of a role of being a status symbol or providing for
individual indulgence. In the U.S., fast food and instant drinks such as Tang
are intended for convenience; elsewhere, they may represent more of a treat.
Thus, it is important to examine through marketing research consumers’ true
motives, desires, and expectations in buying a product.
International Promotion
Promotional tools. Numerous tools can be used to influence consumer
purchases:
• Awareness. Many French consumers do not know that the Gap even
exists, so they cannot decide to go shopping there. This objective is
often achieved through advertising, but could also be achieved
through favorable point-of-purchase displays. Note that since
advertising and promotional stimuli are often afforded very little
attention by consumers, potential buyers may have to be exposed to
the promotional stimulus numerous times before it “registers.”
• Trial. Even when consumers know that a product exists and could
possibly satisfy some of their desires, it may take a while before they
get around to trying the product—especially when there are so many
other products that compete for their attention and wallets. Thus, the
next step is often to try get consumer to try the product at least once,
with the hope that they will make repeat purchases. Coupons are
often an effective way of achieving trial, but these are illegal in some
countries and in some others, the infrastructure to readily accept
coupons (e.g., clearing houses) does not exist. Continued advertising
and point-of-purchase displays may be effective. Although Coca Cola
is widely known in China, a large part of the population has not yet
tried the product.
• Attitude toward the product. A high percentage of people in the U.S.
and Europe has tried Coca Cola, so a more reasonable objective is to
get people to believe positive things about the product—e.g., that it
has a superior taste and is better than generics or store brands. This is
often achieved through advertising.
• Temporary sales increases. For mature products and categories,
attitudes may be fairly well established and not subject to cost-
effective change. Thus, it may be more useful to work on getting
temporary increases in sales (which are likely to go away the
incentives are removed). In the U.S. and Japan, for example, fast food
restaurants may run temporary price promotions to get people to eat
out more or switch from competitors, but when these promotions end,
sales are likely to move back down again (in developing countries, in
contrast, trial may be a more appropriate objective in this category).
Note that in new or emerging markets, the first objectives are more likely to
be useful while, for established products, the latter objectives may be more
useful in mature markets such as Japan, the U.S., and Western Europe.
Constraints on Global Communications Strategies. Although firms that
seek standardized positions may seek globally unified campaigns, there are
several constraints:
resources given up
price = ———————————————
goods received
This implies that there are several ways that the price can be changed:
Reference prices are more likely to be more precise for frequently purchased
and highly visible products. Therefore, retailers very often promote soft
drinks, since consumers tend to have a good idea of prices and these
products are quite visible. The trick, then, is to be more expensive on
products where price expectations are muddier.
Marketers often try to influence people's price perceptions through the use of
external reference prices—indicators given to the consumer as to how much
something should cost. Examples include:
Transfer pricing involves what one subsidiary will charge another for
products or components supplied for use in another country. Firms will often
try to charge high prices to subsidiaries in countries with high taxes so that
the income earned there will be minimized.
• Awareness. Many French consumers do not know that the Gap even
exists, so they cannot decide to go shopping there. This objective is
often achieved through advertising, but could also be achieved
through favorable point-of-purchase displays. Note that since
advertising and promotional stimuli are often afforded very little
attention by consumers, potential buyers may have to be exposed to
the promotional stimulus numerous times before it “registers.”
• Trial. Even when consumers know that a product exists and could
possibly satisfy some of their desires, it may take a while before they
get around to trying the product—especially when there are so many
other products that compete for their attention and wallets. Thus, the
next step is often to try get consumer to try the product at least once,
with the hope that they will make repeat purchases. Coupons are
often an effective way of achieving trial, but these are illegal in some
countries and in some others, the infrastructure to readily accept
coupons (e.g., clearing houses) does not exist. Continued advertising
and point-of-purchase displays may be effective. Although Coca Cola
is widely known in China, a large part of the population has not yet
tried the product.
• Attitude toward the product. A high percentage of people in the U.S.
and Europe has tried Coca Cola, so a more reasonable objective is to
get people to believe positive things about the product—e.g., that it
has a superior taste and is better than generics or store brands. This is
often achieved through advertising.
• Temporary sales increases. For mature products and categories,
attitudes may be fairly well established and not subject to cost-
effective change. Thus, it may be more useful to work on getting
temporary increases in sales (which are likely to go away the
incentives are removed). In the U.S. and Japan, for example, fast food
restaurants may run temporary price promotions to get people to eat
out more or switch from competitors, but when these promotions end,
sales are likely to move back down again (in developing countries, in
contrast, trial may be a more appropriate objective in this category).
Note that in new or emerging markets, the first objectives are more likely to
be useful while, for established products, the latter objectives may be more
useful in mature markets such as Japan, the U.S., and Western Europe.
Abstract:
When going international the challenges the company must handle are new
and unfamiliar. Obstacles the firm never faced before are becoming crucial
in the every day work. Culture is one of these obstacles and can affect the
entire co-operation.
There are some general advices the company always must have in mind
before and during a co-operation on the international market. It is important,
even before entering the foreign country, to inform the personal about the
manners and customs in that new culture. If the first impression becomes
negative, this can be hard to shake. Foreign cultures have different ways of
doing business, for example when it comes to planning ahead and keeping
delivery times. Culture can be both a positive and negative influence and
many companies are struggling in the new and foreign environment.
The important thing to always have in mind is that the foreign culture is not
as we are used to at home and to be prepared before starting the new foreign
operation. Respecting and understanding the new culture without forcing our
own beliefs on people, are things that can be extremely helpful to consider.
By learning the host country’s language, can respect and trust more easily be
won, and competitive advantages can arises.
Advantages
Disadvantages
Foreign regulations and standards: The firm may need to conform to new
standards. This may require changes such as in the production process,
inputs and packaging, incurring additional costs.
Advantages to consider:
Rationale
Research Themes
The main areas for consideration within this focus area have
been grouped into two clusters:
nternational business
Operations
Means
Competitive factors
According to C.K. Prahalad & S. Hart,2002, The fortune at the bottom of the
pyramid, Strategy & Business, 26: 54-67, and (2) S.Hart, 2005, Capitalism
at the Crossroads (p. 111), Philadelphia: Wharton School Publishing.
Top Tier: Per capita GDP/GNI > $20,000 Approximately one billion people
Base of the Pyramid Per capita GDP/GNI < $2,000 Approximately four
billion people
International Business in India looks really lucrative and every passing day,
it is coming up with only more possibilities. The growth in the international
business sector in India is more than 7% annually. There is scope for more
improvement if only the relations with the neighboring countries are
stabilized. The mind-blowing performance of the stock market in India has
gathered all the more attention (in comparison to the other international
bourses). India definitely stands as an opportune place to explore business
possibilities, with its high-skilled manpower and budding middle class
segment.
It was evident till a few years back that India had a marginal role in
the international affairs. The image was not bright enough to be the
cynosure among the shining stars. The credit rating agencies had
radically brought down the country's ratings. But, as of now, after
liberalization process and the concept of an open economy –
international business in India grew manifold. Future definitely has
more to offer to the entire world.
Talk is cheap when it comes to Indian
economy
The frequent talk is magnified by the rise of India's fiercely competitive 24-hour business
TV channels, hungry for sound bites from often elderly politicians and long-time civil
servants who occasionally seem oblivious to market impact.
At the heart of the matter may be the growing pains of an emerging giant of 1.2 billion
people. In two decades, India has transformed itself from a state-dominated economy to
an increasingly open market, with all the risks that entails.
Now as a rival to China, India's every move is in the spotlight as its growth helps drive a
world recovery.
But a tendency to over-promise, from targets for building roads and power plants to
keeping fiscal deficits in check, can erode the credibility of predictions.
"Everyone talking at the drop of a hat creates unnecessary volatility in the market," said
Nirav Dalal, head of debt capital markets at Mumbai-based Yes Bank.
This year, Farm Minister Sharad Pawar was criticised by both the ruling Congress party
and the opposition for pushing up local sugar prices after he said that India may need
large imports.
While India is not alone when it comes to assorted officials weighing in on monetary,
fiscal and economic matters, the frequency of statements from high-level sources sets it
apart.
"Relative to other East Asian economies, there is a lot more seemingly credible
commentary and analysis, some of which may be contradictory," said UBS economist
Philip Wyatt.
"I think that reflects India's size, India's need to upgrade its institutions in line with
markets, but at the same time the ability of senior officials in different arms of
government to have a mouthpiece," said Wyatt, who is based in Hong Kong.
TRENDS IN INTERNTIONAL BUSINESS
An in-depth understanding of international business is a requirement for any player in
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from the United States, Asia, and Europe.
The text's unique approach and emphasis on effective use makes Trends in International
Business: Critical Perspectives a valuable resource. Readers will be delighted by
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